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Vista Meridian Eyes New High
School
BY YUIKA YOSHIDA
JANUARY 8, 2024 1
Vista Meridian expected to lease two-story office building at 1620 Sunflower Ave.
Santa Ana charter school Vista Meridian Global Academy is looking to open a new high school at a Costa Mesa office park, after it gains approval from city officials.
Vista Meridian late last year held meetings with the Costa Mesa Planning Commission to discuss turning a 37,455-square-foot office space at 1620 Sunflower Ave. into a school for 500 students.
The school said the project, located a few blocks north of the San Diego (405) Freeway, received positive initial responses from the commission’s office, but faced opposition during the hearing.
Part of the opposition references an ongoing national debate over charter schools and whether they take money away from district schools.
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1/8/24, 2: 31 PMVista Meridian Eyes New High School - Orange County Business Journal
Don Wilson, superintendent of Vista Charter Public Schools, clarified that charter schools are free public schools that receive per-pupil-funding from the state. “In California, the money follows the student,” Wilson told the Business Journal.
The school has worked out a long-term lease with the building’s owner Tim Nguyen, founder of Costa Mesa financial services software maker MeridianLink Inc. (NYSR: MLNK), which is contingent on receiving the conditional use permit from the city.
Terms of the agreement were undisclosed “out of respect to the owner,” according to Wilson.
The school hopes to gain city approval by Jan. 16, so it can get to work installing necessary upgrades in time to open next fall, top officials at the school said.
Premier Location
The charter school plans to set up the high school in an area of Costa Mesa that has seen a high amount of real estate activity as of late.
The two-story office building where the school is looking to lease, part of a two-building complex, is directly across the street from high-end shopping center South Coast Collection, or SoCo, which sold for a reported $110 million to Baltimore-based Continental Realty Corp. in November.
Nearby is the development site for One Metro West, a 16-acre mixed-use project set to break ground in late 2024 or the first quarter of 2025, according to company officials. It would be built at the current site of an industrial building that sits alongside the 405 Freeway that’s leased to Sakura Paper. It was sold late last year by local businessman Joe Wen for a reported $72 million.
The move into Costa Mesa will prove beneficial not only for the school, but also the city, Wilson said.
“I think having a school with 500 families attending will bring a positive economic impact to the surrounding businesses,” Wilson said.
Career Pathways
This will be Vista Charter Public Schools’ fifth school.
Vista Charter Public Schools was founded in 2010 and currently serves students in Los Angeles, Anaheim and Santa Ana.
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Vista Charter Public Schools opened its first middle school in Los Angeles before expanding to include elementary and high school levels.
“Our goal has always been providing an education for kids from transitional kindergarten all the way through high school,” Wilson said.
The Santa Ana location for Vista Meridian Global Academy was built to serve pre-kindergarten through eighth grade students, but has also temporarily doubled as a high school for freshman, sophomore and junior students.
This new building in Costa Mesa will allow the charter school to establish an official high school for these students.
The countywide charter petition for Vista Meridian Global Academy was approved by the Orange County Board of Education on June 1, 2022.
Many of Vista Charter Public Schools’ students are economically disadvantaged, according to top officials.
The school aims to provide its students with career pathways in fields that are harder to break into such as cybersecurity and biomedical sciences.
Vista Charter Public Schools partnered with local colleges Santa Ana College and Orange Coast College so students can earn credits toward an associate degree in these fields while in high school.
Director of counseling, college and careers Catherine Real, who previously served as principal of Vista Meridian Global Academy, also helps facilitate internships for students.
MeridianLink Ties
The building was originally intended to be used by MeridianLink, founded by Nguyen, who owns both buildings in the industrial park.
Nguyen bought the property for $9.4 million back in April 2019, filings indicate.
Shortly after the purchase, the building sat vacant due to the pandemic, and MeridianLink employees working remotely from home.
The software company has its headquarters at another office in the city. -6-
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Vista Charter Public Schools met Nguyen through the philanthropic work he does through eKadence Learning Foundation, which provides schools with systems management software for free.
“He had an empty office building that he put significant capital into and wanted to give back to the community,” Colin Felch, deputy superintendent of Vista Charter Public Schools, said.
School officials say the space is a perfect fit because of the collaborative setting that will prepare students for the “kinds of places they be working at in four to eight years.” Some of the building’s amenities include a cafeteria, multiple gymnasiums and an indoor tennis court.
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CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-011 Meeting Date: 1/16/2024
TITLE:
AN ORDINANCE AMENDING TITLE 13 (PLANNING, ZONING AND DEVELOPMENT) OF THE
COSTA MESA MUNICIPAL CODE TO ESTABLISH AFFORDABLE HOUSING REQUIREMENTS
FOR NEW RESIDENTIAL DEVELOPMENT PROJECTS
DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES
DEPARTMENT/PLANNING DIVISION
PRESENTED BY: NANCY HUYNH, PRINCIPAL PLANNER
CONTACT INFORMATION: NANCY HUYNH, PRINCIPAL PLANNER, (714) 754-5609 RECOMMENDATION:
Staff recommends the City Council:
1. Find that the adoption of Ordinance No. 2024-XX is exempt from the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15061(b)(3), General Rule in that the affordable housing ordinance will not have a significant impact on the environment.
2. Give first reading to Ordinance No. 2024-XX (PCTY-23-0001) modifying Title 13 (Planning, Zoning, and Development) of the Costa Mesa Municipal Code (CMMC) to establish affordable housing requirements for new residential developments.
874
City of Costa Mesa
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
Item #: 24-011 Meeting Date: 01/16/2024
TITLE: AN ORDINANCE AMENDING TITLE 13 (PLANNING, ZONING AND DEVELOPMENT) OF
THE COSTA MESA MUNICIPAL CODE TO ESTABLISH AFFORDABLE HOUSING REQUIREMENTS
FOR NEW RESIDENTIAL DEVELOPMENT PROJECTS
DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT/PLANNING
DIVISION
PRESENTED BY: NANCY HUYNH, PRINCIPAL PLANNER
CONTACT INFORMATION: NANCY HUYNH, PRINCIPAL PLANNER, (714) 754-5609
RECOMMENDATION:
Staff recommends the City Council:
1. Find that the adoption of Ordinance No. 202 4-XX is exempt from the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15061(b)(3), General Rule in that the affordable housing ordinance will not have a significant impact on the environment.
2. Give first reading to Ordinance No. 202 4-XX (PCTY-23-0001) modifying Title 13 (Planning, Zoning, and Development) of the Costa Mesa Municipal Code (CMMC) to establish affordable housing requirements for new residential developments.
BACKGROUND:
In 2021, the City Council adopted a Strategic Plan identifying five key goals to address specific community issues and needs which included to “diversify, stabilize, and increase housing to reflect community needs.” To address this goal, the City Council also identified several objectives and priorities. One of the Council’s identified priorities included consider ing a draft inclusionary housing ordinance (also referred to as an affordable housing ordinance).
In addition, pursuant to State housing requirements, the City is required to plan for its Regional Housing Needs Assessment (RHNA) allocation of 11,760 units. Approximately 40% of its RHNA allocation falls into moderate, low, and very low -income housing. In response, the City’s Housing Element identifies 47 programs that work together to support and incentivize housing and aff ordable housing. Program 2A of the City’s 2021-2029 adopted Housing Element calls for the City to adopt an affordable housing ordinance which would generally require new housing projects in the City to provide a certain percentage of its housing units as a ffordable units to moderate, low, and/or very low -income households. Housing Element Program 2A states:
“As of adoption of the 6th Cycle Housing Element, the City of Costa Mesa is analyzing the market impacts and potential affordability requirements for an inclusionary housing requirement for specific projects. The City has hired a consultant to evaluate and make recommendations regarding the 875
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structure of a potential inclusionary housing ordinance, including the affordability percentage requirement, potential for an in‐lieu fee option, and other factors. As part of this effort, the City will consider the applicability of establishing a local preference policy.
Objectives: Adopt an inclusionary housing ordinance.”
Financial Evaluation
In order to identify a supportable affordable housing percentage and other policy recommendations, the City retained an expert housing consultant, Keyser Marston Associates Inc. (KMA). KMA prepared a draft Financial Evaluation (FE) report in July 2023, which was supplemented in November 2023. The Financial Evaluation is an analysis that determines the financial impact of applying an affordable housing requirement on a housing development project. Based on that potential financial impact, the FE determine s the supportable affordable housing requirement that the City could impose on new residential developments without being “confiscatory”.
The completed FE and supplemental analysis were made available online on the City’s Affordable Housing Ordinance webpage and the links are included below. Staff and KMA’s recommendations are discussed in detail in the Analysis section of this report. KMA Financial Evaluation (July 11, 2023):
https://www.costamesaca.gov/home/showpublisheddocument/54969/638253773 340200000
KMA Supplemental Analysis (November 6, 2023):
https://www.costamesaca.gov/home/showpublisheddocument/55858/638351433427070000 City Council and Planning Commission Joint Study Sessions
On May 16, 2023 and subsequently on July 26, 2023, City Council and Planning Commission held two joint study sessions to discuss an affordable housing ordinance for Costa Mesa. The first study session provided a general overview of affordable housing program best practices while the second study session focused on the preliminary findings of KMA’s draft FE. City Council and Planning Commission also received public comments at both study sessions as well as provided feedback regarding KMA’s policy recommendations to be incorporated in a draft ordinance.
The May 16, 2023 study session agenda report , meeting video, and public comments are included in the links below:
May 16, 2023 Study Session Agenda Report:
https://costamesa.legistar.com/View.ashx?M=F&ID=11974698&GUID=90360909-8600-4286- A076-E5B7F45794D4
May 16, 2023 Study Session Meeting Video:
https://costamesa.granicus.com/player/clip/3993?view_id=14&redirect=true&h=dc14b3b0c827980 057c8fbbc40502a38
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May 16, 2023 Study Session Public Comments:
https://costamesa.legistar.com/View.ashx?M=E3&ID=1103184&GUID=F4CDF38E-2EEE-4D0C- 8B90-ADB54899FEF6
The July 26, 2023 study session agenda report, meeting video, and public comments are included in the links below:
July 26, 2023 Study Session Agenda Report:
https://costamesa.legistar.com/View.ashx?M=F&ID=12177354&GUID=A49D2109-3609-4770- A7CE-76223D45F377
July 26, 2023 Study Session Meeting Video:
https://costamesa.granicus.com/player/clip/4019?view_id=14&redirect=true&h=a7972baf3ae0c19 09cbb73e6a43d05fe
July 26, 2023 Study Session Public Comments:
https://costamesa.legistar.com/View.ashx?M=E3&ID=1113344&GUID=50122EA8-6A28-42B3- BB2F-5D5434897623
Planning Commission Public Hearings
Following the joint study sessions, staff prepare d a draft ordinance for Planning Commission review and recommendation to City Council. The Planning Commission held two public hearings on November 13, 2023 and December 11, 2023 to discuss the draft ordinance.
At the first public hearing, staff presented the draft content intended to be included in the proposed affordable housing ordinance. The Planning Commission received staff’s presentation as well as public comments, discussed the item, and voted 4-0 (Chair Ereth, Commissioner Rojas, and Commissioner Klepack absent) to continue the item to December 11, 2023.
The November 13, 2023 Planning Commission agenda report, meeting video, and public comments are included in the links below:
November 13, 2023 Planning Commission Agenda Report:
https://costamesa.legistar.com/LegislationDetail.aspx?ID=6413792&GUID=4C906E13-F94B- 49E9-AD3E-73B588C6EB6E
November 13, 2023 Planning Commission Meeting Video:
https://costamesa.granicus.com/player/clip/4063?view_id=14&redirect=true&h=f22a251337c41be eb55301395ff67cc2
November 13, 2023 Planning Commission Public Comments:
https://costamesa.legistar.com/View.ashx?M=E3&ID=1135455&GUID=7ECD4C06-87E5-4283- 8149-4BFF97215AA2
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At the subsequent Planning Commission meeting, staff presented the final draft affordable housing ordinance for recommendation to City Council. The Planni ng Commission recommended changes to the draft ordinance and voted 5 -2 (Commissioner Zich and Commissioner Andrade voting no) to recommend the City Council give first reading of the ordinance. The Planning Commission’s recommended changes are detailed further in the Analysis section of this Agenda Report.
The December 11, 2023 Planning Commission agenda report, meeting video, and public comments are included in the links below:
December 11, 2023 Planning Commission Agenda Report:
https://costamesa.legistar.com/LegislationDetail.aspx?ID=6448847&GUID=F06836A7-2485- 4993-A2B9-7413119EBE05
December 11, 2023 Planning Commission Meeting Video:
https://costamesa.granicus.com/player/clip/4071?view_id=14&redirect=true&h=3afc5737bffd6e20 94027c9beb28f56c
December 11, 2023 Planning Commission Public Comments:
https://costamesa.legistar.com/View.ashx?M=E3&ID=1145138&GUID=D27058F5-3E1C-458F- BC71-819FE295D4F8
Stakeholders Meetings
In addition to the joint study sessions, KMA’s FE and policy recommendations , and staff’s research, the process of drafting the affordable housing ordinance also involved a total of 17 stakeholder meetings with local affordable housing advocate groups and local housing developers with expertise in land development and affordable housing. The meetings were conducted both in person at City Hall and virtually through Zoom.
The meetings included residents from the Costa Mesa community and representatives from the following organizations: Affordable Housing Coalition, The Irvine Company, Sakioka Company, Legacy Partners, City Ventures, The Olson Company, Red Oak Investments, Kennedy Commission, People for Housing, OC Resilience, and the Building Industry Association. In addition, staff and/or KMA have had conversations with the cities of Huntington Beach, Irvine, Santa Ana and several other cities about their experiences with adopting and managing an affordable housing program. Staff and KMA also met one-on-one with developers that have specific experience in developing housing projects in Costa Mesa who were willing to discuss their deve lopment and construction cost projections to ensure that the FE’s projections were reflective of actual residential project costs. The proposed draft ordinance is reflective of the stakeholders ’ input which include d the importance of focusing policy on very-low income households (in addition to low-income), requiring onsite production of affordable units, setting affordable housing percentages at a level that would not disincentivize housing projects, and providing incentives such as flexible parking requirements and concurrent processing of entitlement application(s) with plan check review to further encourage housing production.
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ANALYSIS:
Costa Mesa Community Profile
Approximately 47-percent of the Costa Mesa community earn a lower income and approximately 29 - percent of the community qualify for very low or extremely low-income housing. However, lower income households in Costa Mesa cannot afford to own or rent in Costa Mesa without experiencing overpayment. Per State guidance, a household should generally spend no more than 30 -percent of gross income on housing expenses including utilities. The current average rent for a market rate one- bedroom apartment unit in Costa Mesa is approximately $2,700 yet nearly half of renters in Costa Mesa experience housing cost burdens that exceed 30-percent of gross income and over a quarter of renters experience severe housing cost burdens that exceed 50 -percent of gross income . Recent average for sale home prices in Costa Mesa are over $1 million yet the home price that a moderate - income level household could afford for a three-bedroom house is approximately $500,0000. This data indicates a general mismatch in incomes versus housing expenses and a lack of affordable housing units to meet the community’s current and future housing needs
Unfortunately, affordable housing options including deed restricted units are very limited in Costa Mesa.
Without an affordable housing requirement or redevelopment-based funding programs, newer housing projects have produced market rate housing units. In addition, deed restricted affordable housing units that were constructed in the 1980s and 1990s have since expired and reverted to market rate. As such, production of and access to affordable housing options for lower income households is limited and is unlikely to be remedied by the market or additional housing supply alone. One of the tools that many cities throughout the state and country have utilized to help make progress toward affordable housing goals is an affordable housing ordinance (also referred to as inclusionary housing).
Policy Context
Inclusionary housing programs are not new and in fact, have been used to address affordable housing issues since the 1970s. Since then there have been over 700 other cities across 31 states with an adopted affordable housing ordinance. In California, there are more than 170 jurisdictions with an adopted ordinance including eight from Orange County with some that have existed and produced affordable units within their community for over 30 years. For example, Santa Ana has been able to produce nearly 3,500 affordable rental units and Huntington Beach has produced over 2,500 affordable rental units as part of their inclusionary housing program . These two cities have also collected in -lieu fees and accumulated a sufficient amount to subsidize 100% affordable housing projects and other programs aimed at promoting entry into the ownership housing such as providing down payment assistance for first-time homebuyers.
While an affordable housing ordinance is one tool to address housing affordability, it is not anticipated to produce all of the affordable units that the City is mandated to plan for pursuant to the RHNA allocation.
The affordable housing ordinance is one of many housing programs in the City that complement each other to address housing and affordability issues. Existing programs include tenant eviction protection, rental assistance programs, accessory dwelling unit programs, and the City’s Bridge Shelter. Programs also underway include the corridor visioning and rezoning effort and development standards update intended to promote new ownership and rental housing opportunities overall in compatible areas of the City.
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Although these programs are starting to address the issue, these programs alone do not produce new affordable units or require housing developers to do so. An affordable housing ordinance would help the City meet this specific need by requiring new housing projects to set aside a percentage of new units as affordable and maintain those units as affordable for a specific timeframe (as proposed in the ordinance – 45 years for ownership and 55 years for rental units). Collected in-lieu fees as part of the affordable housing program requirement would also assist the City by creating a Housing Trust Fund that could be used to fund affordable housing projects and new programs.
Furthermore, adoption of the ordinance would help the City maintain compliance with State housing laws since the affordable housing program is listed in the City’s adopted Housing Element. The City is required to implement this program within one year of the Housing Element adoption in order for the City to remain consistent with its Housing Element. If the City does not adopt one, the State could find the City out of compliance with State law requirements making it more vulnerable to legal challenges which could ultimately result in the loss of local control over land use and permitting decisions.
An Incentive-Based Program
The City’s proposed Affordable Housing Program has been structured as an “incentive-based program” that uses the City’s rezoning along commercial/industrial corridors for housing to create value and incentivize housing production overall, while coupling the creation of that value with a requirement to provide a portion of the project’s units as affordable housing. This program structure is in effect a local density bonus program.
To implement the affordable housing program, the City would implement its rezoning program described in the City’s approved Housing Element – which would rezone non-residentially zoned properties located along major commercial and industrial corridors to allow for housing where housing does not currently exist and at increased densities with reduced parking requirements. The rezone and increase in density creates opportunities for new homes that presently do not exist because of the lack of available properties that allow residential uses and the historically low maximum allowable density in Costa Mesa (maximum of 20 units per acre pursuant to the City’s General P lan). Rezoning would create value and thus, incentivizing land owners to sell commercial and industrial properties to housing developers and incentivize housing developers to build. In doing so, the City would require a portion of the added value to be used to provide the required affordable units under the City’s Affordable Housing Program.
The affordable housing program consists of four main components:
1) Project threshold size (minimum number of housing units subject to the ordinance); 2) Required percentages of affordable units;
3) Required income levels for affordable units; and
4) Covenant period (required length of time that units must remain affordable).
Planning Commission’s Recommendation
The Planning Commission discussed each proposed affordable housing program component. Table 1 below provides a summary of staff’s recommendations and the Planning Commission’s recommended changes:
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TABLE 1 – SUMMARY OF AFFORDABLE HOUSING PROGRAM COMPONENTS
PROGRAM COMPONENT PLANNING COMMISSION
RECOMMENDATIONS
FINANCIAL EVALUATION/STAFF
RECOMMENDATIONS
Project Threshold*
60+ dwelling units per acre;
two-acre minimum (Effectively a
120 unit threshold)
10 units
Number of Affordable
Units/Required Income –
Rental*
10% at low-income or
5% at very-low income
60+ du: 11% at low -income or
7% at very-low income
Under 60 du: 6% at low-income
or 4% at very-low income
Number of Affordable
Units/Required Income –
Ownership*
Exempt ownership projects 8% at moderate -income if
providing onsite affordable
units, or payment of in-lieu fee
by right
Covenant Period – Rental At least 55 years At least 55 years Covenant Period – Ownership N/A 45 years (if producing affordable units onsite)
Affordable Unit Minimum Size No more than 15% smaller than average market rate unit
No mor e than 15% smaller than
average market rate unit
Affordable Unit Bedroom Mix Proportional to market rate units Proportional to market rate units Affordable Unit Location Evenly distributed/dispersed
throughout residential project
Evenly distributed/dispersed
throughout residential project
Alternatives for Compliance
Land dedication
Offsite construction of
affordable units
Payment of in-lieu fees
Onsite construction of rental
units (ownership only)
Land dedication
Offsite construction of
affordable units
Payment of in-lieu fees
Onsite construction of rental
units (ownership only)
Incentives
Allow residential uses in
commercial/industrial corridors
Increased densities
Allow low income rents to be
charge based on 80% AMI vs
60% AMI ( required by State
density bonus)
Reduced parking requirements
Concurrent processing
Allow residential uses in
commercial/industrial corridors
Increased densities
Allow low income rents to be
charge based on 80% AMI vs
60% AMI ( required by State
density bonus)
Reduced parking requirements
Concurrent processing
* These program components are the main differences between Planning Commission and the Financial Evaluation/staff’s recommendations.
Based on the Planning Commission’s recommendation, staff updated the draft affordable housing ordinance for City Council’s review. The Planning Commission recommended changes are described below in further detail and shown as strikethrough and underline text in Attachment 2:
Project Threshold – Ordinance Section 13-38.1 and 13-330(a)
Staff recommended a project threshold size of ten units based on the size of housing projects typically experienced in Costa Mesa. At ten units, the ordinance would not apply to the majority of infill projects on small lots, while projects at ten or more units would be required to provide onsite affordable units or to pay an in-lieu fee. Locally in Orange County, the threshold size ranges from zero, meaning requirements apply to any housing project (City of Irvine) to 20 units (City of Brea). 881
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The Planning Commission recommended the minimum project threshold be higher and based on a housing project’s proposed density (60+ dwelling units per acre) and/or project site size (two-acre minimum site size). This would mean any new housing projects under 60 dwelling units per acre and/or any projects under two-acres (even if over 60 dwelling units per acre) would be exempt from the ordinance’s requirements and would not provide onsite affo rdable units or pay housing in lieu fees. Compared to staff’s recommendation, and assuming a two -acre site at 60 dwelling units per acre, this would mean projects with 120 units and under would not be subject to the ordinance.
It should be noted that approximately 30% of the “housing opportunity sites” listed in the Housing Element and shown in Attachment 5, Corridors Map, are two or more acres. (Refer to Page 26 of Appendix B of the Housing Element for a complete list of the housing opportunity sites.) Thus, increasing the threshold would reduce the number of affordable units (or their related housing in lieu fees) that would result from the ordinance.
Required Number/Percentage of Affordable Units – Section 13-330(b)(1a)
Staff and KMA recommended requiring 11% of a housing project ’s units be provided at the low - income level, or 7% at the very-low income level which is the supportable recommendation based on the FE’s “improved land” scenarios. KMA’s financial analysis is based on a conservative approach that balances the City’s need for affordable housing while not discouraging the development of housing in general. In addition, the analysis is unique to each city’s real estate market conditions since it is based on actual land value and sales data from that area. If adopted, the affo rdable housing ordinance would be re -evaluated on a continued basis to ensure the requirements reflect current market conditions which has been similarly done on several occasions by Santa Ana and Huntington Beach.
The Planning Commission recommended the required number or percentages of affordable units be lower to be consistent with the surrounding Orange County cities such as Santa Ana (15% at low-income, 10% at very-low income, or 5% at extremely-low income) and Huntington Beach (10% at low -income or 5% at very -low income); refer to Attachment 3 for a comparison table. The Planning Commission recommended that the required affordable percentages should be 10% at the low-income level and 5% at the very-low income level.
Exempt Ownership Housing Projects – Section 13-328
Staff and KMA recommended requiring 8% of an ownership housing project’s units to be provided onsite at the moderate income level, or to allow a developer to fulfill the requirement with payment of in-lieu fees for any size ownership project. (For rental projects 100 units or less, the ordinance allows payment of in-lieu fees, but any rental project over 100 units is required to provide affordable units onsite).
The in-lieu fees collected would be used to fund housing projects and programs that could include 100% affordable projects or financial assistance for a first -time homebuyer. New ownership units incentivized through the City’s rezoning program would help improve the ownership to renter ratio in the City while in homebuyer programs create an easier path to those homeownership opportunities.
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The Planning Commission recommended that applying the affordable housing requirements (even just in lieu fees) could be a barrier that could discourage ownership housing projects. As such, they recommended to exempt any ownership housing projects from the affordable housing ordinance’s requirements.
Exempting ownership projects from the affordable requirements altogether would mean all new ownership hou sing units would likely be market rate and in addition, such projects would not contribute funds (through in-lieu fees) to programs that could promote affordable ownership projects or otherwise support homebuyers. It should be noted that KMA’s FE did suppo rt applying the requirements to ownership projects and determined that doing so would not cause an undue constraint and would allow a developer a fair return.
Staff Resources
The Department is already restructuring its existing entitlement staff to create a housing-focused team as part of its overall program to improve efficiencies and customer service and promote housing opportunities in Costa Mesa. The vacant Planning and Sustainable Development Manager and Senior Planner positions are being filled and, along with existing planning staff, will continue to more efficiently review and process housing projects.
If an inclusionary ordinance is adopted, it would create a new housing program that would require additional staff and consultant resources to implement, manage, monitor, and enforce the ordinance.
Such tasks would include but are not limited to the collection and management of in -lieu fees, preparation of requests for proposals for housing projects funded by in -lieu fees, agenda reports for the allocation of in -lieu housing funds, development of community development partnerships, preparation and monitoring of affordable housing agreements for each inclusionary project, annual rent certifications to ensure required units are rented to household s at the appropriate income levels, and appropriate tracking and reporting of units to the State annually.
Initially, these responsibilities could be absorbed by the Department’s existing Housing and Community Development team, particularly when the program is in its infancy and in lieu fees are still being collected. However, as the program matures and as affordable housing projects develop, a manager position will likely be necessary to lead and administer this program . The City Manager’s Office and the Department will continue to evaluate Department staffing and bring a recommendation to the City Council concurrently with its mid-year or annual budget.
In addition, initially staff will utilize the Department’s existing consulting budget and third -party plan check contract services to process concurrent plan checks for housing projects, when in house staff resources are at maximum utilization. Annual budget and contract amounts for plan check services will be reviewed and adjusted if necessary as part of the annual budget process.
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Next Steps
If the City Council approves the first reading, staff will return at the next meeting for second reading. If approved, the Ordinance becomes effective 30 days after second reading. In addition, KMA wil l immediately complete an in -lieu fee study which will be presented to the Council for adoption by Resolution, concurrently with the effective date of the Ordinance. Staff in consultation with KMA will also prepare Affordable Housing Program procedures and templates concurrently with the effective date of the Ordinance. KMA’s efforts would require a contract amendment but would be funded within the existing Department budget.
ALTERNATIVES:
The City Council could modify the ordinance and direct staff to return with an update to the draft for an additional first reading. City Council could also not approve the Ordinance, which may subject the City to litigation and/or other State enforcement actions.
FISCAL REVIEW:
Fiscal impacts of the ordinance include the potential for revenue in the form of housing in-lieu fees and the potential for additional staff or consultant resources necessary to manage an affordable housing program over time.
LEGAL REVIEW:
The agenda report and draft Ordinance has been reviewed and approved as to form by the City Attorney’s Office.
CITY COUNCIL GOALS AND PRIORITIES:
This item supports the following City Council Goal:
Diversify, Stabilize and Increase Housing to Reflect Community Needs
CONCLUSION:
The adoption of the proposed Affordable Housing Ordinance would require new residential development projects that meet the minimum threshold size to set aside a portion of its new units as “affordable units” for a 45- to 55-year timeframe. Its adoption would fulfill the objective of Program 2A of the 2021 -2029 General Plan Housing Element and help achieve City Council’s goal to “diversify, stabilize and increase housing to reflect community needs”.
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ATTACHMENT 1
ORDINANCE NO. 2024-xx
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF COSTA
MESA AMENDING TITLE 13 (PLANNING, ZONING, AND
DEVELOPMENT) OF THE COSTA MESA MUNICIPAL CODE TO
ESTABLISH AFFORDABLE HOUSING REQUIREMENTS FOR NEW
RESIDENTIAL PROJECTS
THE CITY COUNCIL OF THE CITY OF COSTA MESA DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1: Findings. The City Council finds and declares as follows:
WHEREAS, the City compiled a community housing characteristics report which found that approximately 47-percent of the Costa Mesa community earns a lower income and approximately 29-percent of the community qualify for very low or extremely low- income housing. Based on housing prices, lower income households cannot afford to own or rent in Costa Mesa without experiencing overpayment;
WHEREAS, on September 27, 2021, the City Council adopted a Strategic Plan identifying five key goals to address specific community issues and needs which included to “diversify, stabilize, and increase housing to reflect community needs.” To address this goal, Council identified considering a draft affordable housing ordinance as a priority;
WHEREAS, the City’s adopted 2021-2029 Housing Element includes Program 2A which calls for the City to adopt an affordable housing ordinance;
WHEREAS, the City retained an expert consultant, Keyser Marston Associates Inc. (KMA), to prepare a Financial Evaluation in order to evaluate supportable affordable housing requirements and make policy recommendations for a potential affordable housing ordinance;
WHEREAS, the City Council held two joint study sessions with the Planning Commission on May 16, 2023 and July 11, 2023 with all persons having the opportunity to speak for and against the proposal;
WHEREAS, a draft affordable housing ordinance has been prepared based on the direction of the City Council and Planning Commission, and considering KMA’s Financial Evaluation and feedback received during public comments and during stakeholders meetings with housing advocates and housing developers;
WHEREAS, a duly noticed public hearing was held by the Planning Commission on November 13, 2023 with all persons having the opportunity to speak for and against the proposal;
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WHEREAS, the Planning Commission voted 4-0 (Chair Ereth, Commissioner Rojas, and Commissioner Klepack absent) to continue the item to December 11, 2023;
WHEREAS, a public hearing was held by Planning Commission on December 11, 2023 with all persons having the opportunity to speak for and against the proposal;
WHEREAS, the Planning Commission voted 5-2 (Commissioners Zich and Andrade voting no) to recommend that the City Council give first reading to adopt an ordinance amending Title 13 of the Costa Mesa Municipal Code to establish minimum affordable housing requirements; and
WHEREAS, a duly noticed public hearing was held by the City Council on January 16, 2024 with all persons having the opportunity to speak for and against the proposal.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF COSTA MESA HEREBY ORDAINS AS FOLLOWS:
SECTION 2: Code Amendment. Title 13 (Planning, Zoning and Development). Title 13, Planning, Zoning and Development of the Costa Mesa Municipal Code, as specified in Exhibit A, attached hereto and incorporated herein by this reference, is hereby amended as set forth therein.
SECTION 3. Compliance with CEQA. Adoption of this Ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3) (General Rule). Under Section 15061(b)(3), the activity is covered by the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the project is exempt from CEQA. This Ordinance will not affect the physical environment by permitting a new use or intensifying an existing use. Instead, the Ordinance establishes affordable housing requirements through a range of means for individual projects. There is no potential for the changes to result in significant impact on the environment. Furthermore, the Ordinance is not considered a project as defined pursuant to Public Resource Code 21065 because the Ordinance will not cause either direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
SECTION 4. Severability. If any section, subsection, sentence, clause, phrase or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of Costa Mesa hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases or portions be declared invalid or unconstitutional.
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SECTION 5. Effective Date. This Ordinance shall take effect on the 31st day after adoption.
SECTION 6. Certification. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same to be published or posted in the manner required by law.
PASSED AND ADOPTED this _____ day of ________, 2024
________________________________
Mayor
ATTEST: APPROVED AS TO FORM
______________________________ ________________________________ Brenda Green, City Clerk Kimberly Hall Barlow, City Attorney
I, Brenda Green, City Clerk of the City of Costa Mesa, do hereby certify that the above and foregoing is a true and correct copy of Ordinance No. 2024-XX ____ introduced at a regular meeting of the City Council of the City of Costa Mesa held on the ____ day of _____, 2024, and was thereafter adopted at a regular meeting held on the _____ day of _______, 2024, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
Said ordinance has been published or posted pursuant to law.
Witness my hand and the official seal of the City of Costa Mesa this ____ day of _______, 2024.
_________________________________
Brenda Green, City Clerk
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EXHIBIT A
ARTICLE 1. RESIDENTIAL DISTRICTS
13-38.1. Affordable housing requirements for new residential developments.
For any proposed residential or mixed-use project with 60 or more dwelling units per acre and with a minimum project site size of two (2) acres, the affordable housing requirements set forth in Chapter XVII (Affordable Housing Ordinance) shall apply unless otherwise exempted.
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CHAPTER XVII. AFFORDABLE HOUSING ORDINANCE
13-326. Purpose.
The purpose of this chapter is to establish an affordable housing program that facilitates the development and availability of housing affordable to a broad range of households with varying income levels within the City to meet current and future affordable housing needs.
13-327. Applicability.
This chapter shall apply to:
(a) properties that are located in areas which the City completed a Zone Change and/or General Plan Amendment that allows for residential development after the effective date of this chapter; and/or
(b) properties that receive City approval of a General Plan Amendment, Zone Change or other discretionary land use or development approval including but not limited to Master Plan, Specific Plan, or subdivision after the effective date of this chapter and which allows for residential development and/or an increase in residential density as compared to the land uses and density that exists on the site at the time of the effective date of this chapter; and
(c) provided, however, that this chapter shall not be applied in a manner that conflicts with applicable State law.
13-328. Exemptions.
The requirements of this chapter shall not apply to the following:
(a) Residential projects with less than 60 dwelling units per acre; (b) Residential projects with a site size under two (2) acres regardless of proposed density;
(c) Any ownership residential project;
(d) Conversions of existing multi-family residential developments such as apartments to residential common interest developments (condominiums) for ownership housing pursuant to section 13-42;
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(e) The reconstruction of any residential structures that have been destroyed by fire, flood, earthquake or other act of nature;
(f) Residential building additions, repairs or remodels; (g) Residential projects or mixed-use projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan; and 13-328. Fairview Development Center Specific Plan.
All residential projects or mixed-use development projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan shall be subject to the affordability requirements established by the provisions of the Specific Plan at the time of its adoption and are not subject to the requirements of this chapter. 13-329. Definitions.
As used in this chapter the following terms shall have the meanings set forth below.
Terms not specifically defined herein shall have the meanings ascribed to them elsewhere in this code:
Affordable Housing Agreement. A legally binding recorded agreement and/or deed restriction in a form satisfactory to the director and the city attorney setting forth those provisions necessary to ensure that the requirements of the chapter are met, including but not limited to those specified in section 13-332.
Affordable Housing Plan. A plan containing all of the information specified and submitted in conformance with this chapter specifying the manner in which affordable units will be provided.
Affordable Housing Trust Fund. The fund into which all collected in-lieu fees are deposited for the purposes of furthering affordable housing goals within the City.
Affordable Rent. The maximum affordable housing cost minus any housing costs that are imposed on the tenant on a mandatory basis. The affordable housing cost is based on the percentages of AMI identified in the following table, as adjusted for household size appropriate for the unit (as defined in California Health and Safety Code Section 50052.5), times 30%:
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Income Category
Percentage of
AMI
Low Income 80%
Very Low Income 50%
Affordable Sales Price. The maximum price that can be charged to a moderate income household based on the calculation methodology defined in California Health and Safety Code Section 50052.5.
Affordable Unit. A dwelling unit that is required to be rented at the affordable rent or sold at the affordable sales price to very low, low- and moderate-income households.
Applicant. A person or entity that applies for approval or approvals for a residential project and/or owns the property or properties on which a residential project is proposed.
Area Median Income (AMI). The median household income of households in Orange County, adjusted for household size, as determined by the California Housing and Community Development department (HCD).
Director. The Director of Economic and Development Services or his or her designee.
Density Bonus. An increase in the number of units permitted in a proposed Residential Project provided pursuant to California State Density Bonus Law as set forth in Government Code Section 65915 et seq.
Extremely Low-Income Household. A household with a gross annual household Income that does not exceed 30% of AMI for Orange County as defined in California Health and Safety Code Section 50106.
Gross Annual Household Income. As defined in 25 Cal Code Regs. Section 6914 including any successor section thereto.
In-lieu Fee. The fee payable as an alternative to the construction of on-site affordable units.
Low-income Households. A household with a gross annual household income between 51% and 80% of AMI for Orange County as defined in California Health and Safety Code Section 50079.5.
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Market-rate Unit. A dwelling unit offered on the open market at the prevailing market-rate for purchase or rental.
Moderate-income Household. A household with a gross annual household income between 81% and 120% of AMI for Orange County as defined in California Health and Safety Code Section 50093.
Ownership Project. A residential project that is intended to be sold for homeownership.
Rental Project. A residential project that is intended to be rented to tenants.
Residential Project. A project undertaken for the purpose of development of land for residential purposes that requires the issuance of a discretionary approval or permit, including a permit for construction, and that will include ten (10) or more dwelling units.
Very Low-income Households. A household with a gross annual household income that does not exceed 50% of AMI for Orange County, as defined in California Health and Safety Code Section 50105.
Zone Change. Any proposed change to the official zoning map. The terms rezone and zoning amendment shall also have the same meaning.
13-330. Affordable Housing Requirements.
The following requirements and standards shall apply to any residential project subject to this chapter:
(a) Project Threshold. The affordable housing requirements is applicable to any proposed residential project with 60 dwelling units or more and with a project site size of two (2) acres.
(b) Number of Affordable Units. The minimum number of dwelling units required to be set aside as affordable units and the required affordability level(s) of the units are specified as follow:
(1) Rental Projects. An applicant of a rental project shall fulfill their obligation with onsite production of affordable rental units at either low or very-low income levels and the minimum required number of units shall be calculated based on the proposed project’s base density.
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a. For residential projects either rezoned to or located in the areas designated to be rezoned in the General Plan and/or within the boundaries of Figure 13-200.106 of section 13.200.106 at 60 or more dwelling units per acre: at least 10% of the total applicable dwelling units proposed shall be affordable at the low-income level or at least 5% at the very-low income level.
For any partial affordable unit calculated, the applicant shall pay a fractional in- lieu fee payment in accordance with the adopted in-lieu fee schedule or round up the calculation to the highest whole number.
(2) Parcel or Lot Merger. An applicant shall not avoid the requirements of this chapter by submitting piecemeal planning permit applications. At the time of the application for first approval for the residential project, the applicant shall identify all contiguous property under common ownership and control. The applicant shall not be required to construct dwelling units upon the contiguous property at the time of the application for first approval; however, the applicant shall be required to include the contiguous property under common ownership or control in its affordable housing plan. The affordable housing agreement shall be recorded against the residential project and all contiguous property under common ownership or control and shall require compliance with this chapter upon development of each contiguous property at such time as there are planning permit applications that would authorize residential units for the residential development and the contiguous property under common ownership or control.
(c) Covenant Period. The affordable units shall remain affordable for a minimum period as specified in the subsection below or as stated in the affordable housing agreement or other agreement(s).
(1) For rental projects, the affordable units must remain affordable for not less than fifty-five (55) years. After fifty-five (55) years the affordability covenant may be removed only if the property is redeveloped as a non-residential use. (d) Timing of Construction. The affordable units shall be constructed concurrently with or prior to the construction of market rate units.
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(1) In phased developments, the affordable units shall be constructed in proportion to the number of dwelling units in each phase of the market rate project. The applicant shall provide a Construction Phasing Plan as part of their project plans for review by the director or their designee prior to the submittal of plans for a building permit.
(e) Unit Size. The size of the affordable units shall be the same size as the market rate units but the final review authority may consider and approve affordable units no more than 15% smaller in square footage than the average square footage of the market rate units.
(f) Bedroom Mix. The bedroom mix of the affordable units shall be proportional to the market rate units or as otherwise agreed in the affordable housing agreements or other approved agreements with the City.
(g) Design. All exterior and interior improvements including floor plan design, finishes/materials, etc. for the affordable units shall be comparable, if not same, to the market rate units. The affordable units shall have same access to and enjoyment of all community amenities/facilities in the residential project. The final review authority may consider and approve alternative exterior and/or interior design improvements for the affordable units as long as it is comparably the same to the market rate units. (h) Location. Affordable Units shall be dispersed and evenly distributed throughout a residential project and not clustered in a particular area of the development or as otherwise agreed at the City’s discretion in an affordable housing agreement.
Affordable units within a residential project that share a common entrance or access shall not have separate entrances or access for market rate and affordable units. (i) Certificate of Occupancy. No certificate of occupancy will be issued for any corresponding market rate unit in a new residential project prior to completion of the required affordable units (including offsite) and/or payment of in-lieu fees. 13-331. Alternative Compliance Procedures.
The following are the alternative options to fulfill the requirements of this chapter if onsite production of affordable units is determined by the director or their designee to be 894
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economically infeasible and would impose an extreme hardship. The director or their designee’s determination shall be made based upon evidence of economic hardship provided by the applicant.
(a) In-Lieu Fees. The payment of in-lieu fees may be used to fulfill the affordable housing requirement for the following residential projects: rental projects with one-hundred (100) or fewer dwelling units and any fractional number of affordable units required. (1) In-lieu fees shall be paid prior to the issuance of the first building permit for the residential project unless specified and/or agreed elsewhere in recorded agreement(s) with the City. For phased developments, the applicant may pay a pro rata share of the in-lieu fee concurrently with the issuance of a building permit for each phase.
(2) In-lieu fees shall be paid according to a fee schedule adopted by the City Council.
The in-lieu fee schedule shall be adjusted periodically on an annual basis or as determined by the City Council or their designee and shall be adopted by resolution.
(3) All in-lieu fees collected shall be deposited in to the City’s housing trust fund. (b) Offsite Construction. Affordable units may be constructed offsite only upon a determination by the director or their designee that onsite production of affordable units is economically infeasible. If this alternative compliance option is chosen, then the offsite affordable units must be constructed prior to or concurrently with construction of the market rate residential project.
(1) The offsite affordable units shall comply with all applicable requirements pursuant to this chapter for onsite production of affordable units. (2) The offsite location shall be located within the City of Costa Mesa boundaries and shall be located within a reasonable distance from the market rate residential project that is subject to the affordable housing requirement. (3) For residential projects for which a master plan is required, the affordable units may either be provided onsite or offsite on a separate parcel within the residential project’s approved master plan boundaries.
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(c) Land Dedication. An applicant may dedicate, without cost to the City, land (single or multiple parcels) within the City of Costa Mesa boundaries that is sufficient to accommodate the number of affordable units required by the market rate project. The following requirements are applicable to any land proposed to be dedicated to the City to fulfill the affordable housing requirement:
(1) The land to be dedicated to the City shall be located in the City of Costa Mesa; (2) The General Plan and zoning standards shall allow for residential use at a density sufficient to allow for the market rate project’s required number of affordable units to be constructed;
(3) The land shall be suitable in terms of size, configuration, and physical characteristics including existing utilities, streets, and other infrastructure improvements necessary to allow for the market rate project’s required number of affordable units to be constructed;
(4) The value of the land shall be equivalent or comparable to the in-lieu fee payment that would be applicable to the proposed residential project; (5) The applicant shall provide property related report(s) to demonstrate the suitability and value of the land to be dedicated including but not limited to title report, appraisal report, and environmental site assessment(s). 13-332. Affordable Housing Agreement and Affordable Housing Plan.
The applicant shall prepare and submit a draft affordable housing agreement and affordable housing plan as part of the proposed residential project’s planning application(s). The director shall review and determine if the plan and agreement are complete and in substantial conformance with the requirements of this chapter. This section shall not apply to residential projects where the developer fulfills their obligation with payment of in-lieu fees or land dedication.
(a) Affordable Housing Plan Requirements. The applicant shall submit a plan detailing how the requirements of this chapter will be implemented. The plan shall include the following information but not limited to:
(1) The location, structure, proposed tenure and size of the proposed market rate and affordable units;
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(2) The total number of affordable units to be provided and the calculations used to determine the number of required affordable units;
(3) A floor plan and site plan depicting the location of the affordable units; (4) The income level targets for each affordable unit;
(5) The mechanisms that will be used to assure that the affordable units remain affordable for the required term as specified in section 13-330(b); (6) A marketing plan for the process by which qualified households will be reviewed and selected to rent affordable units; and
(7) Construction phasing plan schedule with the anticipated completion and opening date and as applicable for phased residential projects. (b) Affordable Housing Agreement Requirements. Upon final project approval, the developer shall execute and record an affordable housing agreement in a form approved by the City Attorney, prior to approval of any final or parcel map or issuance of any building permit, whichever occurs first, and that at a minimum specifies the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential renters of units, consistent with the approved affordable housing plan and any administrative procedures adopted pursuant to section 13-338.
(1) An affordable housing agreement will not be required for projects which will be satisfying their affordable housing requirement through payment to the City of an in-lieu fee.
(2) The City Council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required.
13-333. Affordable Housing Trust Fund.
All in-lieu fees, promissory note repayments, shared appreciation payments and other funds collected under this chapter shall be deposited into a separate account to be designated as the City of Costa Mesa Affordable Housing Trust Fund. The City may elect 897
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to deposit funds from other sources into this affordable housing trust fund. The moneys and all earnings from investments of the moneys in the affordable housing trust fund shall be expended exclusively to provide or assure continued provision of affordable housing in the City through including but not limited to acquisition, construction, development assistance, rent subsidies, or first-time homebuyer programs, and for the associated costs of administering and monitoring these programs.
13-334. Density Bonus.
Pursuant to the California State Density Bonus Law (Government Code Section 65915 et seq), if the applicant is proposing to provide affordable units in exchange for an increase in density, concessions, incentives, or waivers/modifications of development standards, the affordable units required to fulfill the density bonus may also count as affordable units required in this chapter provided they also meet, or exceed, the requirements outlined in section 13-330.
13-335. Parking Requirements.
An applicant that provides affordable units pursuant to this chapter is not required to comply with the parking requirements set forth in section 13-85. A lower parking requirement may be allowed if supported by a parking study prepared by a traffic engineering firm with expertise in parking trends and demands, unless otherwise prohibited by state law. The parking study shall be reviewed and approved by the director or their designee.
13-336. Concurrent Processing.
Concurrent processing of planning application(s) and plan check application(s) may be allowed at the discretion of the director or their designee when the planning application(s) have been deemed complete. The applicant shall be required to enter into a hold harmless agreement with the City prior to any concurrent review. 13-337. Compliance Monitoring.
To ensure that affordable units constructed pursuant to this chapter are properly maintained and continue to comply with the applicable provisions of this chapter, the applicant or responsible party at the time shall submit annual compliance reports to the 898
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City for review. In addition, the City shall conduct periodic onsite audits to ensure compliance with all applicable laws, policies, and agreements. The City Council may adopt fees for the costs of monitoring and compliance review, which shall be deposited into the affordable housing trust fund for that purpose. 13-338. Administrative Procedures.
The City Manager is authorized to adopt administrative rules, regulations, policies, guidelines, standards, and/or procedures necessary to implement the provisions of this chapter including but not limited to eligibility requirements and/or preference standards that may be applied in the selection of homebuyers and tenants. 13-339. Enforcement.
(a) Violations of this chapter may be enforced by all available remedies at law or in equity, including, but not limited to those set forth in section 1-33 of this code. (b) Failure of any city official, employee, or agent to fulfill and/or enforce the requirements of this chapter shall not excuse any person or property from the requirements of this chapter.
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ATTACHMENT 2
(EXHIBIT A)
ARTICLE 1. RESIDENTIAL DISTRICTS
13-38.1. Affordable housing requirements for new residential developments.
For any proposed single or multiple-family residential or mixed-use project with ten (10) or more 60 dwelling units or more per acre and with a minimum project site size of two (2) acres, the affordable housing requirements set forth in Chapter XVII (Affordable Housing Ordinance) shall apply unless otherwise exempted.
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CHAPTER XVII. AFFORDABLE HOUSING ORDINANCE
13-326. Purpose.
The purpose of this chapter is to establish an affordable housing program that facilitates the development and availability of housing affordable to a broad range of households with varying income levels within the City to meet current and future affordable housing needs.
13-327. Applicability.
This chapter shall apply to:
(a) properties that are located in areas which the City completed a Zone Change and/or General Plan Amendment that allows for residential development after the effective date of this chapter; and/or
(b) properties that receive City approval of a General Plan Amendment, Zone Change or other discretionary land use or development approval including but not limited to Master Plan, Specific Plan, or subdivision after the effective date of this chapter and which allows for residential development and/or an increase in residential density as compared to the land uses and density that exists on the site at the time of the effective date of this chapter; and
(c) provided, however, that this chapter shall not be applied in a manner that conflicts with applicable State law.
13-328. Exemptions.
The requirements of this chapter shall not apply to the following:
(a) Residential projects with less than 60 ten (10) dwelling units per acre; (a)(b) Residential projects with a site size under two (2) acres regardless of proposed density;
(c) Any ownership residential project;
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(b)(d) Conversions of existing multi-family residential developments such as apartments to residential common interest developments (condominiums) for ownership housing pursuant to section 13-42;
(c)(e) The reconstruction of any residential structures that have been destroyed by fire, flood, earthquake or other act of nature provided that the reconstruction does not increase the number of existing dwelling units by ten (10) or more; (d)(f) Residential building additions, repairs or remodels provided that such work does not increase the number of existing dwelling units by ten (10) or more; (e)(g) Residential projects or mixed-use projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan; and 13-328. Fairview Development Center Specific Plan.
All residential projects or mixed-use development projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan shall be subject to the affordability requirements established by the provisions of the Specific Plan at the time of its adoption and are not subject to the requirements of this chapter. 13-329. Definitions.
As used in this chapter the following terms shall have the meanings set forth below.
Terms not specifically defined herein shall have the meanings ascribed to them elsewhere in this code:
Affordable Housing Agreement. A legally binding recorded agreement and/or deed restriction in a form satisfactory to the director and the city attorney setting forth those provisions necessary to ensure that the requirements of the chapter are met, including but not limited to those specified in section 13-332.
Affordable Housing Plan. A plan containing all of the information specified and submitted in conformance with this chapter specifying the manner in which affordable units will be provided.
Affordable Housing Trust Fund. The fund into which all collected in-lieu fees are deposited for the purposes of furthering affordable housing goals within the City. 902
Affordable Rent. The maximum affordable housing cost minus any housing costs that are imposed on the tenant on a mandatory basis. The affordable housing cost is based on the percentages of AMI identified in the following table, as adjusted for household size appropriate for the unit (as defined in California Health and Safety Code Section 50052.5), times 30%:
Income Category
Percentage of
AMI
Low Income 80%
Very Low Income 50%
Affordable Sales Price. The maximum price that can be charged to a moderate income household based on the calculation methodology defined in California Health and Safety Code Section 50052.5.
Affordable Unit. A dwelling unit that is required to be rented at the affordable rent or sold at the affordable sales price to very low, low- and moderate-income households.
Applicant. A person or entity that applies for approval or approvals for a residential project and/or owns the property or properties on which a residential project is proposed.
Area Median Income (AMI). The median household income of households in Orange County, adjusted for household size, as determined by the California Housing and Community Development department (HCD).
Director. The Director of Economic and Development Services or his or her designee.
Density Bonus. An increase in the number of units permitted in a proposed Residential Project provided pursuant to California State Density Bonus Law as set forth in Government Code Section 65915 et seq.
Extremely Low-Income Household. A household with a gross annual household Income that does not exceed 30% of AMI for Orange County as defined in California Health and Safety Code Section 50106.
Gross Annual Household Income. As defined in 25 Cal Code Regs. Section 6914 including any successor section thereto.
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In-lieu Fee. The fee payable as an alternative to the construction of on-site affordable units.
Low-income Households. A household with a gross annual household income between 51% and 80% of AMI for Orange County as defined in California Health and Safety Code Section 50079.5.
Market-rate Unit. A dwelling unit offered on the open market at the prevailing market-rate for purchase or rental.
Moderate-income Household. A household with a gross annual household income between 81% and 120% of AMI for Orange County as defined in California Health and Safety Code Section 50093.
Ownership Project. A residential project that is intended to be sold for homeownership.
Rental Project. A residential project that is intended to be rented to tenants.
Residential Project. A project undertaken for the purpose of development of land for residential purposes that requires the issuance of a discretionary approval or permit, including a permit for construction, and that will include ten (10) or more dwelling units.
Very Low-income Households. A household with a gross annual household income that does not exceed 50% of AMI for Orange County, as defined in California Health and Safety Code Section 50105.
Zone Change. Any proposed change to the official zoning map. The terms rezone and zoning amendment shall also have the same meaning.
13-330. Affordable Housing Requirements.
The following requirements and standards shall apply to any residential project subject to this chapter:
(a) Project Threshold. The affordable housing requirements is applicable to any proposed residential project with ten (10)60 dwelling units or more and with a project site size of two (2) acres.
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(b) Number of Affordable Units. The minimum number of dwelling units required to be set aside as affordable units and the required affordability level(s) of the units are specified as follow:
(1) Rental Projects. An applicant of a rental project shall fulfill their obligation with onsite production of affordable rental units at either low or very-low income levels and the minimum required number of units shall be calculated based on the proposed project’s base density.
a. For residential projects either rezoned to or located in the areas designated to be rezoned in the General Plan and/or within the boundaries of Figure 13-200.106 of section 13.200.106 at 60 or more dwelling units per acre: at least 1011% of the total applicable dwelling units proposed shall be affordable at the low-income level or at least 57% at the very-low income level.
b. For residential projects either rezoned to or located in the areas to be rezoned in the General Plan and/or within the boundaries of Figure 13- 200.106 of section 13.200.106 at under 60 dwelling units per acre: at least 6% of the total applicable dwelling units proposed shall be affordable at the low-income level or at least 4% at the very-low income level. c.b. For any partial affordable unit calculated, the applicant shall pay a fractional in-lieu fee payment in accordance with the adopted in-lieu fee schedule or round up the calculation to the highest whole number. (2) Ownership Projects. An applicant of an ownership project may choose to fulfill their obligation with payment of in-lieu fees, onsite production of affordable ownership or rental units, offsite production of affordable ownership or rental units, or dedication of land. Onsite production of affordable units is not required for ownership projects.
a. The applicable in-lieu fee calculation for ownership residential projects shall be based on the requirements set forth in section 13-331(a). 905
b. Should an applicant choose to fulfill their obligation with on-site production of affordable ownership units, the minimum set-aside requirement shall be at least 8% at the moderate-income level. All applicable requirements pursuant to this chapter for onsite production of affordable units shall also apply.
(3) Residential Projects with Mixed Housing Types. If an applicant proposes a residential project that includes both ownership and rental units, the provisions of this chapter that apply to ownership projects shall apply to that portion of the development that consists of ownership units, while the provisions of this chapter that apply to rental projects shall apply to that portion of the development that consists of rental units.
(4)(2) Parcel or Lot Merger. An applicant shall not avoid the requirements of this chapter by submitting piecemeal planning permit applications. At the time of the application for first approval for the residential project, the applicant shall identify all contiguous property under common ownership and control. The applicant shall not be required to construct dwelling units upon the contiguous property at the time of the application for first approval; however, the applicant shall be required to include the contiguous property under common ownership or control in its affordable housing plan. The affordable housing agreement shall be recorded against the residential project and all contiguous property under common ownership or control and shall require compliance with this chapter upon development of each contiguous property at such time as there are planning permit applications that would authorize residential units for the residential development and the contiguous property under common ownership or control. (c) Covenant Period. The affordable units shall remain affordable for a minimum period as specified in the subsection below or as stated in the affordable housing agreement or other agreement(s).
(1) For rental projects, the affordable units must remain affordable for not less than fifty-five (55) years. After fifty-five (55) years the affordability covenant may be removed only if the property is redeveloped as a non-residential use. 906
(2) For ownership projects that fulfill their obligation with onsite production of affordable units, the affordable units must remain affordable for not less than forty-five (45) years.
(d) Timing of Construction. The affordable units shall be constructed concurrently with or prior to the construction of market rate units.
(1) In phased developments, the affordable units shall be constructed in proportion to the number of dwelling units in each phase of the market rate project. The applicant shall provide a Construction Phasing Plan as part of their project plans for review by the director or their designee prior to the submittal of plans for a building permit.
(e) Unit Size. The size of the affordable units shall be the same size as the market rate units but the final review authority may consider and approve affordable units no more than 15% smaller in square footage than the average square footage of the market rate units.
(f) Bedroom Mix. The bedroom mix of the affordable units shall be proportional to the market rate units or as otherwise agreed in the affordable housing agreements or other approved agreements with the City.
(g) Design. All exterior and interior improvements including floor plan design, finishes/materials, etc. for the affordable units shall be comparable, if not same, to the market rate units. The affordable units shall have same access to and enjoyment of all community amenities/facilities in the residential project. The final review authority may consider and approve alternative exterior and/or interior design improvements for the affordable units as long as it is comparably the same to the market rate units. (h) Location. Affordable Units shall be dispersed and evenly distributed throughout a residential project and not clustered in a particular area of the development or as otherwise agreed at the City’s discretion in an affordable housing agreement.
Affordable units within a residential project that share a common entrance or access shall not have separate entrances or access for market rate and affordable units. 907
(i) Certificate of Occupancy. No certificate of occupancy will be issued for any corresponding market rate unit in a new residential project prior to completion of the required affordable units (including offsite) and/or payment of in-lieu fees. 13-331. Alternative Compliance Procedures.
The following are the alternative options to fulfill the requirements of this chapter if onsite production of affordable units is determined by the director or their designee to be economically infeasible and would impose an extreme hardship. The director or their designee’s determination shall be made based upon evidence of economic hardship provided by the applicant.
(a) In-Lieu Fees. The payment of in-lieu fees may be used to fulfill the affordable housing requirement for the following residential projects: Ownership projects; rental projects with one-hundred (100) or fewer dwelling units; and any fractional number of affordable units required.
(1) In-lieu fees shall be paid prior to the issuance of the first building permit for the residential project unless specified and/or agreed elsewhere in recorded agreement(s) with the City. For phased developments, the applicant may pay a pro rata share of the in-lieu fee concurrently with the issuance of a building permit for each phase.
(2) In-lieu fees shall be paid according to a fee schedule adopted by the City Council.
The in-lieu fee schedule shall be adjusted periodically on an annual basis or as determined by the City Council or their designee and shall be adopted by resolution.
(3) All in-lieu fees collected shall be deposited in to the City’s housing trust fund. (b) Offsite Construction. Affordable units may be constructed offsite only upon a determination by the director or their designee that onsite production of affordable units is economically infeasible. If this alternative compliance option is chosen, then the offsite affordable units must be constructed prior to or concurrently with construction of the market rate residential project.
908
(1) The offsite affordable units shall comply with all applicable requirements pursuant to this chapter for onsite production of affordable units. (2) The offsite location shall be located within the City of Costa Mesa boundaries and shall be located within a reasonable distance from the market rate residential project that is subject to the affordable housing requirement. (3) For residential projects for which a master plan is required, the affordable units may either be provided onsite or offsite on a separate parcel within the residential project’s approved master plan boundaries.
(c) Onsite Construction of Rental Units for Ownership Projects. An applicant of a market rate ownership project may construct affordable rental units concurrently with the market rate ownership units. The affordable rental units may be interspersed or located on a separate parcel within the market rate ownership project site and shall comply with all applicable requirements pursuant to this chapter for onsite production of units.
(d)(c) Land Dedication. An applicant may dedicate, without cost to the City, land (single or multiple parcels) within the City of Costa Mesa boundaries that is sufficient to accommodate the number of affordable units required by the market rate project. The following requirements are applicable to any land proposed to be dedicated to the City to fulfill the affordable housing requirement:
(1) The land to be dedicated to the City shall be located in the City of Costa Mesa; (2) The General Plan and zoning standards shall allow for residential use at a density sufficient to allow for the market rate project’s required number of affordable units to be constructed;
(3) The land shall be suitable in terms of size, configuration, and physical characteristics including existing utilities, streets, and other infrastructure improvements necessary to allow for the market rate project’s required number of affordable units to be constructed;
(4) The value of the land shall be equivalent or comparable to the in-lieu fee payment that would be applicable to the proposed residential project; 909
(5) The applicant shall provide property related report(s) to demonstrate the suitability and value of the land to be dedicated including but not limited to title report, appraisal report, and environmental site assessment(s). 13-332. Affordable Housing Agreement and Affordable Housing Plan.
The applicant shall prepare and submit a draft affordable housing agreement and affordable housing plan as part of the proposed residential project’s planning application(s). The director shall review and determine if the plan and agreement are complete and in substantial conformance with the requirements of this chapter. This section shall not apply to residential projects where the developer fulfills their obligation with payment of in-lieu fees or land dedication.
(a) Affordable Housing Plan Requirements. The applicant shall submit a plan detailing how the requirements of this chapter will be implemented. The plan shall include the following information but not limited to:
(1) The location, structure, proposed tenure (rental or ownership) and size of the proposed market rate and affordable units;
(2) The total number of affordable units to be provided and the calculations used to determine the number of required affordable units;
(3) A floor plan and site plan depicting the location of the affordable units; (4) The income level targets for each affordable unit;
(5) The mechanisms that will be used to assure that the affordable units remain affordable for the required term as specified in section 13-330(b); (6) A marketing plan for the process by which qualified households will be reviewed and selected to either purchase or rent affordable units; and (7) Construction phasing plan schedule with the anticipated completion and opening date and as applicable for phased residential projects, a phasing plan. (b) Affordable Housing Agreement Requirements. Upon final project approval, the developer shall execute and record an affordable housing agreement in a form approved by the City Attorney, prior to approval of any final or parcel map or issuance 910
of any building permit, whichever occurs first, and that at a minimum specifies the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential purchasers or renters of units, and resale control mechanisms, including the financing of ongoing administrative and monitoring costs, consistent with the approved affordable housing plan and any administrative procedures adopted pursuant to section 13-338.
(1) An affordable housing agreement will not be required for projects which will be satisfying their affordable housing requirement through payment to the City of an in-lieu fee.
(2) The City Council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required.
13-333. Affordable Housing Trust Fund.
All in-lieu fees, promissory note repayments, shared appreciation payments and other funds collected under this chapter shall be deposited into a separate account to be designated as the City of Costa Mesa Affordable Housing Trust Fund. The City may elect to deposit funds from other sources into this affordable housing trust fund. The moneys and all earnings from investments of the moneys in the affordable housing trust fund shall be expended exclusively to provide or assure continued provision of affordable housing in the City through including but not limited to acquisition, construction, development assistance, rent subsidies, or first-time homebuyer programs, and for the associated costs of administering and monitoring these programs.
13-334. Density Bonus.
Pursuant to the California State Density Bonus Law (Government Code Section 65915 et seq), if the applicant is proposing to provide affordable ownership and/or rental units in exchange for an increase in density, concessions, incentives, or waivers/modifications of development standards, the affordable units required to fulfill the density bonus may also count as affordable units required in this chapter provided they also meet, or exceed, the requirements outlined in section 13-330.
911
13-335. Parking Requirements.
An applicant that provides affordable units pursuant to this chapter is not required to comply with the parking requirements set forth in section 13-85. A lower parking requirement may be allowed if supported by a parking study prepared by a traffic engineering firm with expertise in parking trends and demands, unless otherwise prohibited by state law. The parking study shall be reviewed and approved by the director or their designee.
13-336. Concurrent Processing.
Concurrent processing of planning application(s) and plan check application(s) may be allowed at the discretion of the director or their designee when the planning application(s) have been deemed complete. The applicant shall be required to enter into a hold harmless agreement with the City prior to any concurrent review. 13-337. Compliance Monitoring.
To ensure that affordable units constructed pursuant to this chapter are properly maintained and continue to comply with the applicable provisions of this chapter, the applicant or responsible party at the time shall submit annual compliance reports to the City for review. In addition, the City shall conduct periodic onsite audits to ensure compliance with all applicable laws, policies, and agreements. The City Council may adopt fees for the costs of monitoring and compliance review, which shall be deposited into the affordable housing trust fund for that purpose. 13-338. Administrative Procedures.
The City Manager is authorized to adopt administrative rules, regulations, policies, guidelines, standards, and/or procedures necessary to implement the provisions of this chapter including but not limited to eligibility requirements and/or preference standards that may be applied in the selection of homebuyers and tenants. 13-339. Enforcement.
(a) Violations of this chapter may be enforced by all available remedies at law or in equity, including, but not limited to those set forth in section 1-33 of this code. 912
(b) Failure of any city official, employee, or agent to fulfill and/or enforce the requirements of this chapter shall not excuse any person or property from the requirements of this chapter.
913
APPENDIX C
INCLUSIONARY HOUSING PROGRAM SURVEYS - ORANGE COUNTY
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
COSTA MESA, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.
File name: 7 4 23 Inclusionary Survey; Orange Page 17 of 18 ATTACHMENT 3
-1-
On-site %
Varies
Threshold
Project Size % of AMI
Covenant
PeriodJurisdiction Compliance Options Set Aside %
Covenant
Period
Threshold
Project Size
Rental Development Ownership Development
% of AMI
10%
5 7.5% @ VL + 7.5%
@ Low
10 5 10% @ Low + 5%
@ Mod
55 45
Ordinance
applies to all
housing
projects.
50 unit
threshold for
the production
requirement
10 9% Mod or 6% VL
& Low
15% 30
110%
Low and
ModerateLaguna Beach
No
45 80%
5% @ 50% +
5% @ 80% +
5% @ 120%.
Defined credits for
deeper
affordability & #
of bedrooms.
5% @ 50% +
5% @ 80% +
5% @ 120%.
Defined credits for
deeper
affordability & #
of bedrooms.
Low and
Moderate
45 No
No
No
Laguna Woods
Calculated per project. The calculation
methodology is based on the average land
value in Irvine, the average density of
housing in Irvine, and a defined
predevelopment cost allowance.
Formula:
[(Land Value ÷ Density) + Predevelopment
Allowance] x Percentage Share of Cost
related to affordable units not being
produced
15%
120%
2-subdivision
3-other
3 2-subdivision
3-other
Create on-site units; create off-
site units; pay in-lieu fee;
acquisition/rehabilitation.
15%
Create on-site; pay in-lieu fee. 25%
3 Ordinance
applies to all
housing
projects.
50 unit
threshold for
the production
requirement
Irvine 30
45 La Habra $6.50 per square foot of total building area Create on-site units; create off-
site units; pay in-lieu fee;
donate land.
$247,317 per affordable rental unit.
$348,197 per affordable ownership unit or
lot.
55 No
Huntington Beach
In-lieu fee is allowed for ownership
housing developments that can prove to
the City Council's satisfaction that including
affordable units is financially infeasible.
The fee is calculated based on: the median
price of homes sold in Laguna Woods
during the last quarter of the previous
calendar year minus the affordable price
for a 2-bedroom unit.
Projects with fewer than 50
units can create on-site units;
convert market rate housing to
affordable housing; extend the
term of an existing affordable
project; pay in-lieu fee;
transfer units to a nonprofit
housing agency; create off-site
units; donate land. Projects
with 50+ units must produce
the affordable units on site.
20 Undefined
Percentages of
Very Low & Low
Income
55No 1010%
In-Lieu Fee
120%
Create on-site units; pay in-
lieu fee. City provides
incentives to mitigate the
impact of the requirement.
20 Create on-site units; create off-
site units; preserve or rehab
existing housing; pay in-lieu
fee.
Sliding Scale: 3 to 30 units. In-Lieu Fee
allowed for projects up to 100 units.
Rental: $3.58 to $35.80/SF Ownership:
$2.54 to $25.36/SF. The per SF
measurement caps at 2,000 SF.
Calculated per project. Based on the
Affordability GapBrea
914
APPENDIX C
INCLUSIONARY HOUSING PROGRAM SURVEYS - ORANGE COUNTY
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
Prepared by: Keyser Marston Associates, Inc.
File name: 7 4 23 Inclusionary Survey; Orange Page 18 of 18 -2-
COSTA MESA, CALIFORNIA
3030
Threshold
Project Size % of AMI
Rental: 5% /
15% & Own:
5%
Santa Ana
Jurisdiction
San Clemente
No
Threshold
Project Size % of AMI
6 Only applies to changes in land
use and zoning designations.
Create on-site units; off-site
units; pay in-lieu fee.
55 Very Low
Covenant
Period
Very Low
San Juan Capistrano
No 60 du/ac + 2-
acre min. site
size
55 120%
Only applies to rezone
areas. Create on-site units;
create off-site units; pay in-
lieu fee; donate land.
Based on 90% of the Affordability Gap,
which is updated monthly based on
benchmark market prices
2 Set Aside %
Costa Mesa
4%
Based on the greater of 1% of construction
costs as determined by the Building
Division or 2% of the affordability gap
determined by the formula in the Housing
Element.
5 Ownership Development
6 55
Fee charged per sf of habitable area: 5-9:
$6.00; 10-14: $9.00; 15-19: $12; 20+: $15.
Discounts for use of skilled and trained
labor force
5 10% @ Low
or 5% @ VL
No 2
55 55 10 Moderate 45 (In-lieu fee study in progress) On-site %
Varies
Covenant
Period
No
15% @ Low or
10% @ VL or 5%
@ ELI or 5% Low +
3% VL +2% ELI
Rental: 10% or 5%
Own: in-lieu fee
Compliance Options
Create on-site units; create off-
site units; preserve or rehab
existing housing; pay in-lieu
fee; donate land.
10%
Create on-site units; create off-
site units, pay in-lieu fee;
donate land.
In-Lieu Fee
Rental Development
915
TABLE 1
AFFORDABLE RENT CALCULATIONS
2023 INCOME STANDARDS
APARTMENT DEVELOPMENT
INCLUSIONARY HOUSING: FINANCIAL EVALUATION
COSTA MESA, CALIFORNIA
Studio Units
One-Bedroom
Units
Two-Bedroom
Units
Three-
Bedroom Units
I. General Assumptions
Area Median Income (AMI) 1 $89,450 $102,250 $115,000 $127,800 Monthly Utilities Allowance 2 $95 $111 $148 $183
II. Affordable Rent Calculations
A. Very Low Income - Rent Based on 50% AMI 3
Benchmark Annual Household Income $44,725 $51,125 $57,500 $63,900 Percentage of Income Allotted to Housing Expenses 30% 30% 30% 30% Annual Income Available for Housing Expenses $13,418 $15,338 $17,250 $19,170 Monthly Income Available for Housing Expenses $1,118 $1,278 $1,438 $1,598 (Less) Monthly Utilities Allowance (95) (111) (148) (183) Maximum Allowable Rent $1,023 $1,167 $1,290 $1,415
B. Low Income - Rent Based on 80% AMI
4 Benchmark Annual Household Income $71,560 $81,800 $92,000 $102,240 Percentage of Income Allotted to Housing Expenses 30% 30% 30% 30% Annual Income Available for Housing Expenses $21,468 $24,540 $27,600 $30,672 Monthly Income Available for Housing Expenses $1,789 $2,045 $2,300 $2,556 (Less) Monthly Utilities Allowance (95) (111) (148) (183) Maximum Allowable Rent $1,694 $1,934 $2,152 $2,373
C. Moderate Income - Rent Based on 110% AMI
3 Benchmark Annual Household Income $98,395 $112,475 $126,500 $140,580 Percentage of Income Allotted to Housing Expenses 30% 30% 30% 30% Annual Income Available for Housing Expenses $29,519 $33,743 $37,950 $42,174 Monthly Income Available for Housing Expenses $2,460 $2,812 $3,163 $3,515 (Less) Monthly Utilities Allowance (95) (111) (148) (183) Maximum Allowable Rent $2,365 $2,701 $3,015 $3,332
1 2
3 Based on the calculation methodology defined in California Health & Safety Code Section 50053. 4 Based on 80% of AMI. This percentage of AMI is based on the standard identified in AB 1505.
Based on the 2023 Orange County household incomes published by the California Department of Housing & Community Development (HCD). The benchmark household size is set at the number of bedrooms in the unit plus one.
Based on the Orange County Housing Authority utilities allowance schedule effective as of October 1, 2023. Assumes: Electric Cooking, Electric Heating, and Electric Water Heater; and Basic Electric.
Prepared by: Keyser Marston Associates
File name: 11 30 23 Rent Comparison; Incl Aff Rent Page 1 of 2 -1-
Attachment 4
916
TABLE 2
AFFORDABLE RENT CALCULATIONS
2023 INCOME STANDARDS
APARTMENT DEVELOPMENT
GOVERNMENT CODE SECTION 65915 RENTS
COSTA MESA, CALIFORNIA
Studio Units
One-Bedroom
Units
Two-Bedroom
Units
Three-
Bedroom Units
I. General Assumptions
Area Median Income (AMI) 1 $89,450 $102,250 $115,000 $127,800 Monthly Utilities Allowance 2 $95 $111 $148 $183
II. Affordable Rent Calculations
A. Very Low Income - Rent Based on 50% AMI 3
Benchmark Annual Household Income $44,725 $51,125 $57,500 $63,900 Percentage of Income Allotted to Housing Expenses 30% 30% 30% 30% Annual Income Available for Housing Expenses $13,418 $15,338 $17,250 $19,170 Monthly Income Available for Housing Expenses $1,118 $1,278 $1,438 $1,598 (Less) Monthly Utilities Allowance (95) (111) (148) (183) Maximum Allowable Rent $1,023 $1,167 $1,290 $1,415
B. Low Income - Rent Based on 60% AMI
3 Benchmark Annual Household Income $53,670 $61,350 $69,000 $76,680 Percentage of Income Allotted to Housing Expenses 30% 30% 30% 30% Annual Income Available for Housing Expenses $16,101 $18,405 $20,700 $23,004 Monthly Income Available for Housing Expenses $1,342 $1,534 $1,725 $1,917 (Less) Monthly Utilities Allowance (95) (111) (148) (183) Maximum Allowable Rent $1,247 $1,423 $1,577 $1,734
C. Moderate Income - Rent Based on 110% AMI
3 Benchmark Annual Household Income $98,395 $112,475 $126,500 $140,580 Percentage of Income Allotted to Housing Expenses 30% 30% 30% 30% Annual Income Available for Housing Expenses $29,519 $33,743 $37,950 $42,174 Monthly Income Available for Housing Expenses $2,460 $2,812 $3,163 $3,515 (Less) Monthly Utilities Allowance (95) (111) (148) (183) Maximum Allowable Rent $2,365 $2,701 $3,015 $3,332
1 2
3 Based on the calculation methodology defined in California Health & Safety Code Section 50053.
Based on the 2023 Orange County household incomes published by the California Department of Housing & Community Development (HCD). The benchmark household size is set at the number of bedrooms in the unit plus one.
Based on the Orange County Housing Authority utilities allowance schedule effective as of October 1, 2023. Assumes: Electric Cooking, Electric Heating, and Electric Water Heater; and Basic Electric.
Prepared by: Keyser Marston Associates
File name: 11 30 23 Rent Comparison; DB Aff Rent Page 2 of 2 -2-
917
Source: Esri, Maxar, Earthstar Geographics, and the GIS User Community ²
Corridor
Areas
Harbor Blvd
Newport Blvd
19th St
18th St
17th St
I-405
SR-73
SR-55
Santa Ana River
Baker St
Bristol St
Legend
Corridor Areas
Housing Opportunity Sites
City Boundary
ATTACHMENT 5
918